Shared Ownership

Shared ownership. Collective consumption. The unplanned economy. Call it what you will—a new movement of the age-old concept of sharing property is gaining in popularity thanks to a boost in digital technologies and a decline in institutional trust.

The more consumers empower themselves by having their communities get the most out of goods and services, the more the traditional system will have to react, from changing to whom goods and services are sold, to changing the definitions of what a sale, asset–basically, money–is in such a system.

Ask a Floridian retiree about timeshares and they’ll probably rattle off a few good real estate stories. Ask about Airbnb and they might think you’re talking about a running shoe. Name familiarity aside, the two concepts are not dissimilar at face value—the former is a condo sharing scheme hatched in the ’60s, the latter a peer-to-peer rent-out-your-place hoteling alternative. But while the former was little more than a scheme to boost sales to mid-to-upscale property owners, the latter serves as a flagship brand of a much larger shared ownership movement, one driven by web technology and socioeconomic pressures whose full blown effect can empower entire populations at the expense of big business and government.

Tweaking the own-for-life model

Shared ownership is nothing new—it has its roots in the earliest of civilizations—but what’s interesting about this particular movement is its growth out of, and use within, highly capitalistic societies, all out of the convenient relationship between venture capital interests in social technologies and consumers looking for alternatives.

While these social technologies have not even been around for the whole of two decades, they’ve tweaked the one-to-one own-for-life model in several ways. Web 1.0 brought with it Craigslist as a digital forum facilitating offline barter and increasing usage of items; numerous peer-to-peer networks have been built on which tons of digital content has been shared, and on the more IP-friendly side, companies like Netflix and Spotify have turned recorded entertainment from an own-at-home model to a membership model where entire catalogs are available in exchange for a monthly fee.

The latest wave in this space has the mark of social networking (e.g. profiles, commentary and sharing) and is about building enhanced transactional platforms (i.e. not just postings, but a true marketplace). Case in point: Airbnb and competitors Wimdu and Roomorama offer a place to post and transact on short-to-long term stays from available ‘inventory’—spare beds and couches while away on vacation (or in the next room). Transactions are done on the site in advance and the platform takes a cut. The social nature of the site lets users build profiles and write and receive reviews. The offering in many cases is simply more valuable than the ‘corporate’ alternative; prices are typically cheaper than hotels or corporate housing and offer better lodging experiences (e.g. more genuine dwellings and/or the chance to meet knowledgeable locals while travelling, sometimes in more interesting/less touristy areas).

The model is fragmenting out to multiple ‘verticals’—RelayRides and Getaround offer an equivalent model for car use, does the same with storage space, Gidsy for swapping experiences, and TaskRabbit for task delegation. There’s even peer-to-peer money lending sites like Prosper and Zopa. And while the long tail is being chased, sites like Tradepall, Fiverr, Swaptree and Favabank position themselves as generalist marketplaces for the exchange of, well, anything. the profits

While these sites have popped up relatively recently, they’re not just clever domain names and nifty concepts they’ve already stimulated significant economic activity. Airbnb is estimated to have made $50m in 2011 with roughly $60m nights booked to date. Car sharing service Zipcar went public in the past year and is currently making over $50m per quarter, with over 700 000 members; while they approach profitability trying to account for their investment in the nearly 10 000 car fleet, Airbnb and similar platforms have it even sweeter—since the community owns the goods and shares them, they needn’t make any upfront investment and are simply left to take a cut off of every transaction they host. How exciting is this model? How’s $120m injected into Airbnb as a vote of capital confidence?

Why here, why now?

Seeing the positive reaction to date one wonders why, twenty years into the internet, we’re only seeing this form of asset sharing now.

The new web technologies behind the aforementioned sites have been key to stimulating this movement—these include secure monetary transaction capability, social networking and user experience. These alone would not be sufficient. A process of acclimation would first be required before users could get comfortable actually making deals on these platforms, deals that involve things as intimate as, well, people sleeping in your bed. At a recent Disrupt conference, Airbnb CEO Brian Chesky outlined this habituation process: first, users would have to ease into the comfort to transacting online (e.g. facilitated by game changers in this space like PayPal). Second, they would have to habituate to a process of sharing photos and information online (e.g. facilitated by the widescale adoption of Facebook and now Instagram) and then get used to meeting people in person from the internet (e.g. facilitated through dating sites and social networks with event-functions).

It’s the economy, stupid

But even with the technology and user’s comfort in place, the interest in these communities would not exist were it not for socioeconomic factors. One of these relates to something even a timeshare investor could appreciate: cost-savings. With shared ownership, you end up paying less, buying only what you actually need. With the global economic downturn of ’07-’08 and the uncertain climate resulting from it, cost-saving has become much more critical to consumption behavior (though interestingly, group deal platforms, also social and transactional platforms based on the appeal of cost-cutting, existed as early as the early 2000s, but didn’t take off until late 2008).

Of course, shared ownership for cost-saving goes well beyond the web, e.g. the spike of professionals in London renting with roommates into their 40s, or the unprecedented amount of Americans 24-34 living with their parents. Most recently, a barter network has sprung up in Greece in response to their economic woes, not the least of which is the lack of currency confidence. Called Volos, it uses the web for communication but also has physical marketplaces set up for exchange. While it’s received the support of the government, its goal is effectively to get around it to restore some level of economic efficiency.

An anti-choice

Greece is a good example of another recent socioeconomic factor—disenfranchisement from the ‘institution.’ The onslaught of global movements, including Occupy Wall Street, the Tea Party, G8 protests and the Arab Spring all speak to a fundamental disappointment and mistrust of either government, big business (finance capitalism being at the height of these), or both. Shared ownership and exchange platforms, both digital and physical, offer the opportunity to minimize the involvement of government and business and increase value to the consumer. Peer-to-peer lending evades the banks, barter evades taxation and currency risk and sharing arrangements help get around large corporations whose business models rely on producer surplus (put most simply, selling at a price beyond what people would pay given the value they intend to get out of it).

Shared ownership not only avoids government and big business as intermediaries, it also helps to build economic efficiency. Start-up Uber speaks of stimulating a taxi social network in San Francisco vs. the regular red tape process of applying for a taxi license in the city which takes nothing less than 17 years. All things being equal, a fully democratic marketplace is more likely to lead to more small guys coming up with resourceful ways to offer goods and services for income.

Sharing in the future

What we’re seeing is all relatively early stage, and it’s exciting to speculate on the potential reach these platforms might have. On one hand, these digital sharing platforms might be lambasted as yet another web fad, and may be stopped in their tracks with regulatory pressure. On the other hand, extrapolating far ahead, it is hard to believe that in an increasingly competitive global economy with scarcer resources we will be able to afford the waste of producer surplus and non-optimally used goods.

The Forum For the Future’s FutureScapes scenarios paint a year 2025 where shared ownership will be a necessity out of the need to consider the cost of carbon in products purchased. This increased expensiveness will lead to more shared ownership to cut cost; product manufacturers in turn will have to rebuild their businesses to understand the implications of how their products are purchased and used. Like the example of the Bixi, the city wide bike schemes who sell bikes and their distribution infrastructure to municipal governments, one might anticipate more businesses turning to what might be called a B2C ‘business-to-community’ approach focused on an entirely different sales, marketing and maintenance life cycle than that of selling to millions of individuals.

But perhaps shared ownership goes beyond sharing—it’s the beginnings of a generalized breakdown in the standard conception of products, services, and assets, particularly as they stand within a monetary system. While money recognizes value through a common measurement, the correspondence between those measurements and the value of the goods within their community can get highly distorted (as seen with hyperinflation and currency devaluation). A new conception of value and wealth is based on understanding these are not driven by money, per se, but driven by value as experienced within a community. For example, whereas banks tend to measure people based on their credit history (a highly limiting filter), a new conception might involve going beyond cash flows to assess the individual’s capability to do or build something valuable, perhaps convertible to cash down the line, perhaps convertible to something else. Similarly, incumbent businesses may view free or ‘freemium’ models (ones that abandon the old cash-now-in-exchange-for-product model) less as threats and more as true value-adds. Google and Facebook are, in their own right, excellent examples of how free services developed a staggering level of reach on which marketplaces could be built and big rewards could be reaped.

While money recognizes value through a common measurement, the correspondence between those measurements and the value of the goods within their community can get highly distorted (as seen with hyperinflation and currency devaluation). A new conception of value and wealth is based on understanding these are not driven by money, per se, but driven by value as experienced within a community.

Ultimately, this new value-based system doesn’t have to shun money, it just recognizes the fundamental flaw of forgetting of money as a medium, not as an ends. When that happens, monetary valuations will change to reflect those ends, and sometimes change drastically. Could anyone anticipate that Facebook’s ‘free’-ness could lead from a dormroom trend to the biggest tech IPO in history? Likewise, as the timeshares and Airbnbs of the world catch on in droves, the value and price of a condo or tourist-central apartment might jump up too to reflect how much use and value others can get out of it. Putting the numbers aside, shared ownership as a concept is a reminder of how much more value is hidden in our economy than the previous system might lead us to believe.

Perhaps the better analogy of growth takes a page from the YouTube story. When this empowering self-publishing platform first came out, some speculated it might replace traditional production companies altogether. Despite this, while user-generated video has grown, TV and film are still around, arguably more so than ever. So, on the one hand, with shared ownership platforms, the proverbial economic pie may be sliced differently to favor consumers and businesses built off of the new model—government and incumbent business might quibble over lost crumbs, small or large. On the other hand, with big business getting smarter about production and building more useful products for a larger number of people, the overall pie might grow bigger to satisfy everyone’s appetite.

The sharing economy evolved quickly from when we first explored the topic back in 2012. If you are interested to know more, read Ruby J. Murray's 2016's follow-up piece on the sharing economy: "Labor in the Panopticon".

We also see shared ownership as one component of a larger phenomenon, one that privileges access over ownership. Using that framework, streaming services like Pandora, Grooveshark, Rdio and the previously mentioned Spotify are about access as opposed to owning or even co-owning. Coworking spaces, while including many community benefits, are also about access to office space and facilities, instead of owning one’s own office furniture and supplies. As the internet and its culture(s) takes more room in mainstream culture, we can also recognize that for many, shared ownership and access logically flows from an Open Source mentality where collaboration and sharing of code is a form ownership that makes sense — AR

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